Second District, Division 3 Found Hearsay Evidence Did Not Underpin Award.
Here is a procedurally interesting case, although the opinion does not shed light on why a jury awarded attorney’s fees as damages pursuant to a fee clause in a note purchased by an attorney from a bank. (Usually, this exercise takes place under a post-trial motion procedure.) It also goes to show you that fees, as damages, must be supported by competent, substantial evidence. If not, vacation of the award may well happen, as it did in the next case.
Soni v. Neman, Case No B222133 (2d Dist., Div. 3 Mar. 7, 2011) (unpublished) was a case where a plaintiff attorney bought a note and two guarantees in a situation where he felt that the property had plenty of equity so that he could reap some sort of profit, whether handsome or slim. He sued to collect, but defendant raised an interesting defense--Penal Code section 6129, which provides that “[e]very attorney who, either directly or indirectly, buys or is interested in buying any evidence of debt or thing in action, with intent to bring suit thereon, is guilty of a misdemeanor” (a champerty inspired statutory provision).
The trial court concluded there was no evidence to justify giving section 6129 as a defense (although it has been recognized as a defense in the right circumstances), resulting in a jury verdict award of a little under $3.5 million. Included in that amount was $655,306.99 in attorney’s fees under a contractual fees clause in the promissory note.
Although affirming most of the judgment, the appellate court modified it to delete the fee award. Reason? Plaintiff only produced hearsay evidence that fees were expended by predecessor bank or his law firm on related title litigation potentially covered under the fees clause. The trial court should have sustained the hearsay objection, which meant there was no evidence plaintiff incurred fees at all. This lack of substantial evidence was dispositive as far as the fee award is concerned.
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